How the On-Demand Economy Reshaped Cities

Since 2010, a slew of on-demand companies and technologies have managed to use consumer data to transform the commercial significance of urban living. From a report: Historically, one of the great economic benefits of urban life is having access to jobs, schooling, goods, and services without needing to travel very far. But digital platforms that aggregate consumer demand are making physical density less important. Uber and Airbnb, the killer apps of the 2010s, exemplify this change. Once upon a time, visitors needed to flock to quarters where a city’s supply of hotel accommodations and other tourist amenities were physically consolidated, usually downtown. If you needed a ride, you used to call the taxi company directly, or flag down one of the cabs that served that area. Now we transmit our demands for trips and beds as data from wherever we are, rather than direct interactions that depend on physical nearness. Uber and Airbnb consolidate our requests with those of a sea of other users, set prices, offer us suppliers, and dispatch them to us. The apps are creating their own agglomerations of demand, networks that are held together via digital ligaments instead of actual proximity. Kevin Webb, a transportation data expert, points out that Amazon works the same way, building off the big-box store model that came before it: Instead of physically traveling to an area where you can buy tennis balls, shampoo, and a can of tomato paste at three different but close-together shops, its shopping algorithms mean that it can stash those items on a single warehouse shelf thousands of miles away. What does this shift mean? On-demand platforms have made certain kinds of goods and services more convenient, affordable, and accessible for customers across the income, age, and race spectrums. New places and things opened up for new markets. But the less-desirable consequences of replacing physical marketplaces with digital bundles of demand have been major. As ride-hailing emerged, the taxi industry in most cities has been gutted; in many others, traffic congestion has spiked and transit ridership has declined. Thanks to online short-term rentals, traditional hotels have seen a declining share of travelers opting for their wares and neighborhood housing shortages have been exacerbated by hosts who rent to Airbnb guests rather than full-time tenants. In some cases, once-residential neighborhoods have been emptied of locals and turned into streets of rentable ghost hotels.